The location was a pad site banking center within a retail power center project. The client was only responsible for its share of a limited pool of shopping center operating costs. RRG determined through the course of the audit that while the lease prescribed share was fifteen percent (15.00%), the landlord had been consistently using an arbitrary forty-four percent (44.00%). It was determined that the landlord adopted the share utilized by the previous landlord following its purchase of the project nine (9) years prior. Further, the limited pool expense basis had been greatly broadened by the landlord in determining the cost pass through charges to the client. While the real estate taxes attributable to the pad site were directly billed to and paid by the client, the landlord was also including a tax component associated with the remainder of the project in the client’s liability. The landlord not only agreed to adjust the pro-rata share and expense pool determination for all subject years, but also the real estate tax pass through methodology that had been implemented since the commencement of the lease thus producing additional savings through the lease term.

Pro-Rata Share
Real Estate Taxes
Expense Pool Determination

About RRG

RRG is an independent, international consulting and advisory firm specializing in the development and implementation of enterprise-wide lease audit and cost control strategies.